Precision Metaliks Limited IPO: Among a slew of IPOs on the SME platforms, another company has come up with its IPO. Precision Metaliks Limited has come up with its IPO. It will list on the NSE EMERGE platform. So let us discuss in detail about the prospects of Precision Metaliks Limited.
About the company
Precision Metaliks Limited was incorporated in the year 2012. The company is engaged in manufacturing activities/processes on semi-finished wheels by rendering value added services such as cleaning, washing, buffing, polishing, testing, and packaging. The following are the company’s major products and services:
- Value added services on alloy wheels:
The company converts semi-finished or raw wheels to finished wheels by carrying value added services such as polishing, buffing, testing and packaging for their major clients.
- Automated cleaning of Aluminium chips:
This process has been developed as a prototype and has been found to be very energy and cost efficient and the output meets with all the quality standards needed for manufacturing of auto components.
- Robotic polishing of alloy wheels:
The company carries out a combination of robotic grinding and buffing, combined with automatic media polishing, which allows 3D polishing of alloy wheels casting. The process has been automated to make it consistent and efficient.
- Other engineering services:
The company also provides high-end design engineering services, analysis, product development, prototyping, tooling design, and various other services.
Precision Metaliks Limited IPO Details
The following are the details of the company’s IPO:
- The IPO will open for subscription on January 19, 2022 and will close on January 24, 2022.
- It is a fixed price issue IPO with a face value of ₹10 per equity share.
- The IPO price is set at ₹51 per equity share.
- Each market lot consists of 2000 equity shares and each retail individual can apply up to 1 lot i.e. ₹102,000.
- The shares will list on the NSE EMERGE platform.
- The company is raising equity worth ₹21.93 crores.
- The promoter holding will come down to 58.62% post the IPO from the current 79.70%.
Precision Metaliks Limited IPO Subscription Details
|19-01-22 (Day 1)||1.15x||2.18x||1.16x|
|20-01-22 (Day 2)||0.41x||4.31x||2.36x|
|21-01-22 (Day 3)||0.49x||6.45x||3.47x|
|24-01-22 (Day 4)||2.81x||11.90x||7.36x|
Objectives of the IPO
The following are the objectives of the IPO:
- The company will use ₹16 crores to meet the additional working capital requirements.
- Further, ₹4 crores will be used by the company for general corporate purposes.
- Also, the company believes that listing its shares will give more visibility and enhance the corporate image of the company.
The following are the key risks that the company faces in its business:
There are certain legal proceedings against the company and the promoters. Any adverse decision in this regards can have negative impact on the business.
- The company does not enter into any long-term contracts with any of its clients.
- The company operates in a highly competitive industry with low barriers to entry.
- In the last two fiscal years, the company has generated negative cashflow from operations.
- The largest client of the company accounted for 98.7% of its revenue. This is too much dependence on a single client.
- The company depends upon only a few suppliers and aluminum constitutes a major component of the company’s cost.
- The company has entered into certain related party transactions.
The following are the key strengths of the company:
- The company specializes in providing precise and automated solutions in finishing of semi-finished alloys.
- The company receives high repeat orders from its customers.
- The company boasts a strong professional team. Its promoter Jayanthi Roja Ramani has various prestigious educational qualifications.
Fundamentals of the company
The following are the fundamentals of the company:
- The company’s revenue from operations increased from ₹0.05 crores in FY19 to ₹49.24 crores in FY21.
- The company’s EBITDA increased from ₹1.19 lakh in FY19 to ₹1.64 crores in FY21.
- The company’s profit after tax increased from ₹0.46 lakhs in FY19 to ₹1.5 crore in FY21.
- The company’s earnings per share stood at ₹14.42 as of FY21.
- The company is debt free.
- The company’s share capital stood at ₹1.2 crores as of FY21.
- The company’s return on net worth as of FY21 was 9.72%.
- Its net asset value per equity share was ₹121.73 as of March 2021.
As per the company’s prospectus, it considers Remsons Industries Limited, Uni Abex Alloys, and Investment and Precision among its peer group. Based solely on the PE ratio, the company seems to be relatively cheaply valued as compared to others. But other metrics such as the return on net worth are also better for other companies. They also have earned higher revenues than Precision Metaliks Limited.
The following image provides a comparable analysis of the company with its peers:
The following were the details about Precision Metaliks Limited IPO. Investors must perform their own due diligence before investing in the company’s IPO. Again, as the company is listing on the NSE EMERGE platform, investors should take into account the liquidity risk.